International Labour Organisation Global trends in the labour market, and skills UNESCO-Cedefop Global skills conference 20-21 October2016 Moazam Mahmood Director a.i. Research Department International Labour Organisation

Number of macro drivers of growth and jobs: Demand side and Supply side: Demographic change – aging: changes C & S on Demand side changes LFPR on Supply side migration: changes LFPR on Supply side b) Growth in per capita incomes – changes C patterns on D side changes LFPR on supply side c) Competitiveness for profitablity – drive to reduce ULCs Technical change – response to changes in demand and supply eg aging will increase K/L ratios; migration will reduce K/L ratios e) Organisation of production: affected by a) – d): eg off shoring for proximity to increased demand in low income countries; reshoring as wages rise in low income countries The effects are both on the quantity and quality of jobs as follows: I. Closing some jobs and opening others. II. Trends in productivity III. Trends in employment status. IV. Contractual changes, e.g. full time, part time, duration of contracts.

Is the current state of the crisis the new normal. Increasing pre vs Is the current state of the crisis the new normal? Increasing pre vs. post-crisis job gaps, which are most significant in advanced economies, with women faring worst in recent years.

I. Closing some jobs and opening others: Job Churn

Shortage of Global Demand: Wages lost due to global jobs gaps Shortage of Global Demand: Wages lost due to global jobs gaps. In absence of the job gap, aggregate global wages in 2013 would have been $1,218 trillion above the actual level. Virtuous Circle: increase in wagesincrease in household consumptionIncrease in enterprises’ profits.

Economic Growth and Employment Generation (Long Term Elasticity): AE’s growth down and elasticity up vs. DC’s Growth up and elasticity down.

Employment by Occupation Non-routine manual occupations down. Routine occupations up in some countries and down in others no clear trend. Non-routine cognitive occupations up. Type of skills needed in the labour force are changing: Automation has been replacing first manual routine and increasingly non routine tasks. Change in task profile of jobs will change  becoming more complex  higher demand of high skilled non routine tasks. Young people will feel the impact more than others and will need to adapt.

The poor have a high share of low and medium skilled workers and very low share of high-skilled workers. Non-poor have a higher share of high-skilled workers than the poor and a low share of low skilled workers. Low skilled workers have the highest poverty rate, followed by medium skilled workers.

II. Trends in Productivity

Productivity trends: Determinant of long-term economic growth Productivity trends: Determinant of long-term economic growth. Larger drop in productivity growth, but faster recovery than employment growth rates from 2010 to 2014.

III. Trends in Employment Status

In general, the share of wage and salaried workers and own account workers are the highest. High-income countries have the highest share of wage and salaried workers, whilst low-income countries have the highest share of own-account workers. High-income countries: small increase in wage and salary workers. Middle-income countries: significant increase in wage and salary workers and decrease in unpaid family workers. Low-income countries: significant increase of own account workers and decrease in unpaid family workers. Occupation status by income group Source: ILO – Trends Econometric Models, October 2015.

Wage and Salaried employment is growing, but still only accounts for half of global employment. 83 84 85 82 81 78 79 75 63 64 63 58 59 58 56 57 51 51 48 47 44 40 41 40 34 31 28 28 24 20 22 19 18 16 17 17

IV. Contractual Changes

Scarcity of Permanent Contracts: ¼ of all workers are employed on a permanent contract, 13% on a temporary or fixed term contract and a majority (60.7%) without any contract. -High income countries  highest share of permanent contracts; -Middle income countries highest share of no contract workers and high share of own account workers; -Low-Income countries highest share of own-account workers. Type of contract of employees by income region

Trends: decline in employment security in high income economies between pre and post crisis periods.

Part-time employment is widespread, particularly among women, and is generally increasing. More than 14 per cent of persons in employment were working on a part-time basis of less than 30 hours per week. 24% of employed women and 12.4 of employed men. 13 10 13 18 22 18 18 25 31 37 32 44 87 90 82 78 82 69 63 68 56 82 87 75